Practice Fusion Reaches Agreement with U.S. Department of Justice

Practice Fusion – a subsidiary of leading healthcare IT provider Allscripts – has reached a $145 million agreement with the United States Department of Justice. The settlement is due to resolve potential criminal and civil liability facing Allscripts, as a result of Practice Fusion violations that allegedly occurred – and were initially investigated by the DOJ – prior to Allscript’s acquisition in early 2018.

HIPAA Journal reports that Practice Fusion allegedly violated “HIPAA, the HITECH Act’s electronic health record (EHR) incentive program, and the Anti-Kickback Statute,” with investigations opened in the District of Vermont in March 2017. Allscripts has been tight-lipped on the exact nature of the violations, but a Securities and Exchange Commission (SEC) report filed by the company detailed five additional requests for documents and information through another CID and HIPAA subpoenas. The SEC report also detailed a grand jury subpoena in connection with a related criminal investigation in March 2019.

The Allscripts/Practice Fusion investigation is not an isolated event in the industry. Allscripts noted in their SEC filing that they were aware of other EHR providers who are responding to similar investigations by the U.S. Attorney’s Office, including two other EHR providers that recently settled Department of Justice allegations. Those settlements resulted from civil investigative demands and required significant payments and ongoing compliance costs in connection with long-term corporate integrity agreements. One such provider is eClinicalWorks, which reached a $155 million settlement to resolve allegations “that eClinicalWorks misrepresented the capabilities of its software…[and] paid kickbacks to certain customers in exchange for promoting its product.”

Allscripts President Rick Poulton described the settlement as “not insignificant,” but expressed a desire for the company to put the allegations behind them. Allscripts’ SEC filing noted that “similar settlements by or findings against us could have a material adverse effect on our business, financial condition and operating results,” increasing the pressure to get a deal done. While pending final approval, Mr. Poulton characterized the $145 million payment as “in line with other settlements in the industry,” and said Allscripts is “happy to have reached the agreement in principle.” The company hopes to finalize the settlement over the coming months.

Increased regulatory attention may represent a new normal for Healthcare IT providers. The National Law Review notes that vendor compliance is likely to face continued scrutiny as the Department of Justice doubles down on commitments to enforcement actions. Allscripts may be the latest high-profile company to settle, but they appear unlikely to be the last.